Badger Infrastructure Solutions TSE: BDGI reported record second-quarter results, with revenue rising 23% year over year to CAD 257 million and adjusted EBITDA increasing 25% to CAD 66.1 million, as broad demand across infrastructure, industrial and construction markets supported higher fleet utilization and pricing.
Adjusted EBITDA margin expanded 40 basis points from the prior-year period to 25.7%, while adjusted earnings per share rose 15% to CAD 0.69. CFO Rob Dawson said revenue growth, improved fleet efficiency, utilization and operating leverage more than offset the near-term effects of investments in staffing, training, operating initiatives and new service lines.
“Our second quarter results reflected the strength of customer demand, the effectiveness of our operating strategy, and the continued commitment of our team to deliver profitable growth,” Dawson said.
Broad End-Market Demand Supports Growth
President and CEO Rob Blackadar said Badger experienced healthy demand across a diverse set of end markets. Projects underway or beginning during the period included LNG facilities, semiconductor plants, hospitals, airport expansions, energy-storage projects, automotive plants, stadiums, chemical-processing facilities, power-generation projects, pipelines, fiber and communications infrastructure, wastewater facilities, data centers, food and beverage plants, pharmaceutical facilities, transmission and distribution projects, transportation work and heavy civil infrastructure.
The company’s revenue per truck per month, or RPT, reached CAD 47,731 in the quarter, up 14% from a year earlier. Blackadar said the increase reflected both improved utilization and pricing initiatives.
Dawson said Badger’s data platform and operational changes have increased the availability of trucks for revenue-producing work. He cited the practice of leaving trucks at customer sites rather than returning them to branches as one example of measures that can improve productive utilization.
Management said pricing momentum improved as the second quarter progressed. Blackadar said the company identified pricing opportunities in April and May, though it was not as “nimble” as it could have been in certain markets initially. He said Badger expects demand conditions to support further pricing opportunities in the second half of 2026 and into 2027.
Fleet Expansion and U.S. Manufacturing Plans
Badger ended the quarter with 1,822 hydrovacs, with its average fleet count up 8% year over year. Its Red Deer manufacturing facility delivered 80 hydrovacs during the quarter, compared with 51 in the same period last year. The company also retired 36 units and refurbished 12 units.
Management reiterated its plan to grow the fleet at the high end of its previously stated 7% to 10% range for full-year 2026. The company expects to refurbish between 30 and 50 hydrovacs and retire between 130 and 150 units during the year.
Badger is also pursuing a second manufacturing plant in the United States, which it expects to begin operating in the second half of 2027 or early 2028. Blackadar said the potential site area is broadly between Texas and Oklahoma and the Interstate 75 north-south corridor, though the company has not finalized a location or capital-cost estimate.
Dawson said the economics of an additional facility are supported by Badger’s growth, fleet replacement needs, logistics and the risk-management benefits of operating two plants. Current tariffs on trucks manufactured in Canada and imported into the U.S. further improve the potential returns, he said.
Management expects both the Red Deer plant and the new U.S. facility to operate concurrently as the business expands. Blackadar said the U.S. plant is being considered with scalability in mind rather than as a fixed-capacity project.
Investments Weigh on Gross Margin, but New Services Progress
Badger said its ongoing investments reduced second-quarter gross profit margin by approximately 50 to 70 basis points. These investments include the rollout of its Operational Excellence program, operator hiring and training, and the launch of two complementary service lines.
The first of those service lines, industrial cleaning, is underway. Dawson said the offering serves a similar customer base and uses similar assets as the company’s core hydrovac operations, while creating opportunities for longer-term recurring maintenance contracts at industrial facilities. The second service line is expected to begin in the second half of 2026.
Blackadar said customer adoption of the industrial-cleaning offering has been encouraging, with industrial customers asking Badger to provide services across broader facility portfolios. Management said early margins are tracking in line with internal plans.
Despite the recent margin improvement, Dawson cautioned against expecting an accelerating pace of margin expansion because the company remains focused on investment and long-term scaling. He reiterated management’s expectation that adjusted EBITDA margins will begin approaching the company’s 25% to 30% target range in 2027.
Balance Sheet and Capital Returns
During the quarter, Badger completed its inaugural unsecured bond offering, issuing CAD 300 million of 5.375% five-year senior notes. The proceeds were used to repay borrowings under its credit facility.
Dawson said Badger’s leverage stood at 1.5 times EBITDA, the midpoint of its targeted 1 to 2 times range, and that the company has substantial liquidity to fund organic growth, service-line investments, the planned U.S. manufacturing facility and shareholder returns.
Year to date, the company purchased and canceled 80,676 common shares under its normal course issuer bid at a weighted average price of CAD 63.18 per share. Badger plans to renew the program in August while continuing to return capital through dividends.
On market conditions, management said data-center work represented roughly 13% to 14% of Badger’s activity during the second quarter, below 15%. Blackadar said the company is not focused on any single end market and intends to maintain diversification, while Dawson said that non-data-center infrastructure projects remain largely nondiscretionary even if some are delayed by capacity constraints tied to data-center construction.
About Badger Infrastructure Solutions (TSE:BDGI)
Badger Infrastructure Solutions Ltd is North America's provider of non-destructive excavating services. Its key technology is the Badger Hydrovac, which is used primarily for safe excavation around critical infrastructure and in congested underground conditions. The Badger Hydrovac uses a pressurized water stream to liquefy the soil cover, which is then removed with a powerful vacuum system and deposited into a storage tank. The company manufactures and designs its truck-mounted hydrovac units, giving an opportunity to incorporate feedback from its hydrovac operators into its existing and future design and manufacturing processes.
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